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Buying your first home? It can be a daunting process, and if you are unprepared going into it, you can be making some long term mistakes. The Washington Post has an informative article on how classes are popping up to help the new home buyer.

When I was in real estate, I couldn’t spend time looking for a home if the prospects weren’t qualified,” said Petts, who teaches homeownership classes for aspiring owners. “Agents make money when they sell you a home, but do they always have the customer’s best interest at heart?”

The answer to that question, among other concerns of potential homeowners, is central to Petts’s classes at the Neighborhood Finance Corp. in Des Moines. The nonprofit group is one of 245 local organizations around the country aimed at educating consumers about the ins and outs of owning a home.

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Wade said these underserved populations have much to learn. Many must prop up credit scores or otherwise remain prone to lending at loan rates far beyond market rates for mortgages. Credit scores are typically used by lenders to gauge a borrower’s ability to repay a loan. Credit scores range from a not-so-good 300 to a sterling 850. The magic number for reliable borrowers is 700. Wade said the credit scores of attendees climb an average of 50 points during classes.

The higher the credit score, the lower the loan interest rate. The kind of loan a consumer gets can make a big difference in what they end up paying for their home. For example, a house listed for $175,000 with a 5 percent down payment would cost a good credit risk borrower about $350,000 over the life of a 30-year loan at 5.5 percent. A borrower with a tarnished credit history would likely get a subprime loan at 8.5 percent and would pay nearly $500,000 over the same period.

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